NEW YORK - U.S. stocks rose, after the biggest weekly drop for the Standard & Poor’s 500 Index in about two months, amid speculation Congress will reach a deal to head off more than $600 billion in spending cuts and tax increases.

Hewlett-Packard Co. and Caterpillar Inc. jumped more than 1 percent. Investors bought shares of companies most tied to economic growth, sending technology and material shares higher by at least 0.7 percent. Facebook Inc. climbed 2 percent after Bank of Montreal raised its rating on the company to outperform from underperform.

The S&P 500 gained 0.2 percent to 1,405.49 at 11:29 a.m. in New York. The Dow Jones Industrial Average fell 6.88 points, or 0.1 percent, to 12,931.23 today. Trading in S&P 500 companies was 24 percent below the 30-day average at this time of day.

“The fiscal cliff is the worse-case scenario, and if we have something better than that, then that’s a positive,” said Walter “Bucky” Hellwig, who helps manage $17 billion of assets at BB&T Wealth Management in Birmingham, Alabama. “I think we will get a deal. How do we sort that out and the tightening effect on the economy, that will be what the market responds to after the deal.”

Talks to reach a deal averting the so-called fiscal cliff are “progressing,” Senate Majority Leader Harry Reid said in an interview. The U.S. Senate was set to convene today to discuss measures to avoid the automatic spending cuts and tax increases that take effect beginning in January.

Budget impasse

Private discussions between Reid and Minority Leader Mitch McConnell that began Dec. 28 stalled yesterday because of disputes over income tax rates, the estate tax and other issues. McConnell, a Kentucky Republican, reached out to Vice President Joe Biden in an effort to break the impasse, while staffers worked into the night trading and reviewing offers.

The S&P 500 slipped 1.9 percent last week, the most since Nov. 9, amid concerns lawmakers weren’t making progress on a budget deal. The benchmark index has fallen 4.1 percent after reaching the highest level since 2007 in September as Obama’s re-election set up a budget showdown with the Republican- controlled House of Representatives. U.S. exchanges are closed tomorrow for New Year’s Day.

The gauge has advanced 12 percent for the year, extending the bull market rally to 108 percent since March 2009, as financial stocks and consumer discretionary companies advanced more than 19 percent. Gains in 2012 have been curbed this month, with the S&P 500 dropping 0.7 percent. The loss is the worst December performance since 2007, when it fell 0.9 percent, data compiled by Bloomberg show.

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